EUR/USD hits 2-week lows on the back of a stronger US dollar

• Sharp reversal in EUR/USD: from highest in almost two months to lowest in two weeks.  
• US Dollar extends gains versus European currencies.  

The EUR/USD pair dropped further despite the recovery in equity prices in Wall Street and in crude oil prices. It bottomed at 1.1341, the lowest since December 18. During the last hour rebounded modestly and is trading at 1.1360, a hundred pips down for the day.  

The main driver continues to be US dollar strength. The greenback even trimmed losses against the Japanese yen amid a recovery in equity prices. The Dow Jones is down just 0.25% while the Nasdaq erased a 2% slide and is now up 0.10%. US yields rose modestly during the American session. The 10-year yield stands at 2.67%, the highest since the Asian session. The US dollar Index rose from 95.80 to 96.76, the highest level in six days.  

Regarding data, the US PMI Manufacturing Index dropped in December to 53.8 from 55.3, the lowest level since in 15 months. On Thursday, the economic calendar shows ADP, ISM and jobless claims due ahead of Friday’s NPF report.  

EUR/USD Levels  

The pair continues to move with a bearish bias in the short-term after being again rejected from above 1.1450. So far it has been able to hold on top of 1.1340/45. A consolidation below opens the doors to more losses and to a potential test of 1.1300/05 (Dec 3, 5 & 11 low). On the upside, a recovery above 1.1400 would ease the downside pressure.